4/22/2010 @ 7:20PM

Are We Getting Closer to 'Clean' Ethanol?

It goes by the name GH-61. It turbocharges an enzyme, a protein that itself speeds up chemical reactions, but exactly how, or how it is made, is known only to its manufacturers at the Danish firm Novozymes. Starting next fall it will be employed at a biofuels plant in Emmetsburg, Iowa. If all goes well, the enzyme cocktail that contains this special GH-61 will help transform corncobs into ethanol for autos, likely marking the first production of cellulosic ethanol at a reasonable price.

Cellulosic ethanol represents a huge potential market for Novozymes, whose enzymes play a role in everything from detergents to beer to gasohol. Long promised (and often overhyped), cellulosic ethanol is made by converting plant waste or nonfood crops like switchgrass. That sidesteps the problems of fuel ethanol made from food crops like corn: that it competes with human consumption and is environmentally dubious. Novozymes’ chief executive, Steen Riisgaard, urges caution. It will be a few years, he says, maybe 2013 or beyond, until lots of new refineries are up and buying that GH-61 enzyme mixture in any quantity. (Poet, the nation’s biggest ethanol maker, is building the Emmetsburg plant.) Still he insists, “We are a real company, and when we say we are ready, we mean we are ready.”

Riisgaard has led Novozymes since the company split from the pharmaceutical company
Novo Nordisk
in 2000. Sales have grown an average of 11% per year since then, to last year’s $1.6 billion. Profits have grown 16% annually over the same period, to $230 million last year. Novozymes dominates the market for industrial enzymes with 47% of the market. Danish firm Danisco, parent of the U.S.-based Genencor, is second with 21%.

Novozymes’ enzymes are crowding out petroleum-based ingredients in laundry and dish detergents made by the likes of
Procter & Gamble
. (Enzymes in dishwashing soaps, for example, will cut the long chains of egg yolk protein that stick so well to a breakfast plate.) Its enzymes help make most of the nation’s ethanol. Agricultural companies add its enzymes to animal feed to help animals absorb more nutrients in the food, allowing the companies to cut back on additives.

“We can continue to grow at the expense of the chemical industry,” Riisgaard says. “What we are trying to do is make sure we still can have all the stuff we enjoy for our daily life but based on sugar instead of oil.”

Riisgaard, 59, has been a nature lover since his childhood, which was spent in suburban Copenhagen. In the 1970s he was active in environmental causes, which then focused on pollution by industrial chemicals. He joined what was then Novo as a researcher in 1979 and has been working to replace those chemicals with biology-based ingredients ever since. His hobby is bird-watching. He is the chairman of Denmark’s chapter of the World Wildlife Fund.

Most of Novozymes’ enzymes are produced by just two organisms, the bacterium Bacillus subtilis and the fungus Aspergillus oryzae. These are common creatures, found in dirt and well known–Aspergillus is used to make soy sauce, sake and miso, for example. Novozymes can, through genetic engineering, train these microbes to spit out single enzymes or even cocktails of enzymes in huge quantities.

Companies have been working for years on an enzyme that would help make fuel from stalks and leaves. Plants are made mostly of tough stuff called cellulose and hemicellulose. The challenge has been finding a way to cheaply break that stuff up into sugars that can be fermented into fuel.

In a sweeping gesture reminiscent of a mythical order from a king concerning the tide, Congress decreed three years ago that in 2010 the nation’s refiners would buy 100 million gallons of cellulosic ethanol and blend it into gasoline. Both science and economics got in the way. The science wasn’t quite ready, and financing for new factories became scarce during the economic crisis. The mandate was lifted. It returns in 2011 and grows to 16 billion gallons by 2022.

Novozymes says its enzyme, called Cellic, accounts for 50 cents of the $1.90-per-gallon cost of cellulosic ethanol to be made by Poet. Poet will presumably sell it for more than that. (The ethanol wins a $1.01 tax break, so at a Poet price of $3 its effective cost to the refiner would be $1.99.)

That 50 cents is still 10 to 15 times the cost of enzymes needed to turn corn kernels into ethanol. But over the last two years, according to Poet Chief Executive Jeffrey Broin, the two companies have worked together to improve the performance of the enzymes sevenfold. Using less, they get the cost per gallon down. Broin says Poet still needs and expects to see lots of improvement. “Based on Novozyme’s track record, we have great confidence that we can do it in a very short period of time,” Broin says.

Riisgaard says he’s already looking for ways to make enzymes so powerful they could remove entire steps in the refinery, cutting costs in another way. Novozymes’ latest enzymes for corn kernel ethanol have allowed ethanol makers to skip the high-energy step of cooking the corn starch before turning the starch into glucose.

Riisgaard is now moving the company beyond enzymes. In 2007 he began a research and development and acquisition push that is just beginning to pay off. Novozymes is building a factory south of Beijing, to be finished this year, which will make hyaluronic acid. It’s a gooey polymer found throughout the body. It makes skin soft and supple, helps wounds heal and is implicated in brain development.

Companies now make the polymer for a number of medical and cosmetic applications, such as injecting it into lips to make them fuller or skin to make it less wrinkly. But the way biochemists have until recently obtained hyaluronic acid isn’t pretty–by chopping up those floppy red combs on roosters’ heads or fermenting the nasty bacterium streptococcus, strains of which cause any number of human diseases. Novozymes has been able to retrain its bacillus bacteria to produce high-quality hyaluronic acid without using animals or pathogens.

Riisgaard also sees a future in fungi. Novozymes is expanding a factory in Saskatoon, Canada that will produce a fungus that, when applied to plants, helps them fight specific pests, like the larva of black vine weevil. Last year it began selling albumin, a protein used widely in the pharmaceutical industry, made from a fungus, replacing albumin derived from human and bovine blood. Perhaps the company’s biggest–and most distant–hope lies in Brazil. There the company is teaming with the chemical company Braskem to create polypropylene, a $66 billion plastic used to make water bottles and car bumpers, out of sugar. Riisgaard is especially optimistic about this part of the company, which produces organisms and products instead of enzymes, predicting revenue of $1.1 billion by 2018, up from $128 million now.

Not that Riisgaard will neglect the main line of business: producing enzymes. The firm is working on developing cocktails of enzymes that can tackle a variety of tasks in one shot. The enzyme that will break up an egg stain usually won’t do anything for a grease stain or a starch stain. But now Novozymes is selling soapmakers mixes of enzymes that will get out several types of stains even better than each enzyme would individually.

Novozymes is also finding ways to get its enzymes into new areas altogether. Last year it began selling an enzyme to beermakers that allows them to skip the malting step (which consists of allowing barley to sprout and then roasting it). Beer lovers needn’t turn up their noses. “Malting is just an ancient way of producing enzymes,” says Riisgaard–in this case, enzymes that transform the barley’s starches into sugars. The Novozymes product cuts the brewer’s water and heating bills. If it works, Novozymes will have played a role in both drinking and driving.